The Dangote Refinery has finalized the acquisition of 5 million barrels of US crude, with deliveries scheduled for next month and September.
According to a Bloomberg report on Thursday, the refinery initiated a tender process to procure an additional 6 million barrels of American crude for September.
This brings their total purchases of West Texas Intermediate crude oil for the year to more than 16 million barrels.
As indicated by tenders reviewed by Bloomberg, the refinery may increase its procurement from the US in August and September, reflecting availability of surplus barrels and competitive pricing on the global market.
The choice of US crude by Nigeria’s Dangote Refinery likely stems from the availability of surplus barrels at competitive prices globally.
The refinery, located near Lagos, primarily processes local crude sourced from offshore terminals, which can reach the plant within a few days.
Tracking data cited in the report shows that the refinery received over 41 million barrels of feedstock in the first half of the year, coinciding with test runs and incremental increases in processing rates.
Approximately a quarter of this feedstock has been sourced from the United States, according to Bloomberg.
With this recent acquisition, Bloomberg predicts a substantial increase in the influx of American feedstock.
In May, the refinery had planned a significant purchase of 24 million barrels of crude from the US over the course of a year.
The call for US oil reflects Nigeria’s struggle to lift its own crude production, which remains well below theoretical capacity, as well as Dangote’s willingness to tap cheaper supplies than it can find at home.
It also highlights how influential the refinery will be in global crude and fuel trading.
Nigeria has not been able to meet its Organization of Petroleum Exporting Countries (OPEC) + quota for at least a year. The nation pumped about 1.45 million barrels a day of crude and liquids in April, still far below its estimated production capacity of 2.6 million barrels a day.
Crude theft, aging oil pipelines, low investment, and divestments from oil majors operating in the country have all contributed to declining production.
To ensure enough local supply to the 650,000 barrel-a-day refinery, Nigeria’s upstream regulator, the Nigeria Upstream Petroleum Regulatory Commission (NUPRC), released new draft rules last month that will compel its oil producers to sell crude to domestic refineries. NUPRC mandated all oil companies in Nigeria to supply crude to domestic refineries that are unable to procure it locally.
Producers are allowed to export crude only after meeting these domestic supply obligations.
Under the new rules, NUPRC will act as an intermediary between local refiners and producers when agreements on crude supply are not reached, facilitating a sales purchase agreement using a willing-buyer, willing-seller model.
This new policy could benefit the Dangote refinery by enabling it to procure crude oil from local suppliers rather than depending on imports.
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